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IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.230 of 2011 (O&M)Date of decision: 05.03.2014 The Commissioner of Income Tax, Patiala .....- Appe Vs, Surinder Singh Bedi,Prop.Bedi Motors,Mandi Gobindgarh ....mesponden CORAM: HON’BLE MR. JUSTICK AJAY KUMAR MITTALHON’BLE MS. JUSTICE ANITA CHAUDHRY Present:Ms. Savita Saxena, Advocate for the revenue. Mr. S.K.Mukhi, Advocate for the assessee. Ajay Kumar Mittal,J, inThis appeal has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (in short, “‘the Act’) against the ordedated 30.11.2010, Annexure A.3 passed by the Income Tax AppellateTribunal, Chandigarh Bench *B’ Chandigarh (in short, “the Tribunal’) inITA No.1038/CHD/2010, claiming following substantial questions of law:- 1)Whether in the facts and circumstances of the case, theITAT is legally correct in uploading the CIT(A)'s orderthat reference to valuation cell for determination of FairMarket Value (FMV) of a capital asset for the purposesof computation of capital gains could not be made by theAO, even when Section 55A of the Income Tax Act,1961 empowers the AO to do so?ITAT is legally correct in uploading the CIT(A)'s orderthat reference to valuation cell for determination of FairMarket Value (FMV) of a capital asset for the purposesof computation of capital gains could not be made by theAO, even when Section 55A of the Income Tax Act,1961 empowers the AO to do so? 11)Whether in the facts and circumstances of the case, the ITAT 1s legally correct in holding that Fair Market valueof a capital asset has no relevance in order to determinefull value of consideration for the purposes ofcomputation of capital gains?of a capital asset has no relevance in order to determinefull value of consideration for the purposes ofcomputation of capital gains? 111)Whether in the facts and circumstances of the case, theITAT 1s legally correct in upholding the CIT(A)'s orderdeleting the addition ofL35,90,505/- made by the AO bytaking the difference in sale consideration as per reportof the Valuation Officer and the sale agreement (.e.463,40,505/- -Lv27,50,000/-), which addition has beenmade on the basis of a report received as a consequenceof reference under section S5SA”ITAT 1s legally correct in upholding the CIT(A)'s orderdeleting the addition ofL35,90,505/- made by the AO bytaking the difference in sale consideration as per reportof the Valuation Officer and the sale agreement (.e.463,40,505/- -Lv27,50,000/-), which addition has beenmade on the basis of a report received as a consequenceof reference under section S5SA” 2A few facts relevant for the decision of the controversyinvolved, as narrated in the appeal may be noticed. The assessee 1s anindividual. He filed his return declaring an income of<a10,46,271/- for theassessment year 2007-08 on 27.7.2007 which was processed under section143(1) of the Act on 19.3.2008. The case was taken up for scrutiny andassessment was completed vide order dated 15.12.2009, Annexure A.1 at anincome of =46,36,780/- making addition ofLv35,90,505/- on account ofshort term capital gain after adopting fair market value of building at=63,40,505/- as per technical report of the valuation Officer. Agegrieved bythe order, the assessee filed appeal before the Commissioner of Income Tax(Appeals) [CIT(A)]. Vide order dated 18.5.2010, Annexure A.2, the CIT(A)allowed the appeal holding that reference to valuation cell for determinationof capital gains could not be made by the Assessing Officer. Not satisfiedwith the order, the revenue filed appeal before the Tribunal. Vide orderdated 30.11.2010, Annexure A.3 the Tribunal dismissed the appeal. Hencethe instant appeal by the revenue. 3)Learned counsel for the revenue submitted that since there wasno collector rate which was prevalent, therefore,it was necessary to refer thematter to the DVO under Section 55SA of the Act 3)Learned counsel for the revenue submitted that since there wasno collector rate which was prevalent, therefore,it was necessary to refer thematter to the DVO under Section 55SA of the Act 4On the other hand, learned counsel for the respondent assesseesubmitted that reference under section 55A of the Act could only be made inrespect of cases covered by provisions under Sections 45([A), Section 45(2)and 45(4) of the Act. Sections 45 and 48 refer to full value of consideration,Unless there was a provision specifically providing that the fair marketvalue will be treated to be full value of consideration, the fair market valuecannot be taken as the full value of consideration as per Section 45 readwith section 48 of the Act. Reliance was placed on judgments 1n—CIT andanother vy. George Henderson & Co. Limite, (1967) 66 ITR 622 (SC) andCIT vy, Gillanders Arbuthnot & Co.(1973) 87 ITR 407 (SC) and Delhi High Court judgment inCIT vs. Smt. Nilofer 1.Singh,(2009) 309 ITR 233. | 4 After hearing learned counsel for the parties, we do not findany merit in the appeal. The primary question that arises for consideration inthe appeal is whether the Assessing Officer was justified in making areference to the DVO under Section 55A of the Act for ascertaining the fairmarket value of the capital asset which was transferred. 6.Identical issue has been considered in [ITA No.463 of 201&Commissioner of Income fax Ll, Ludhiana vy. Shri Dharam PalAggarwal, Prop. Shakti International, K-59, Sarabha Nagar, Ludhiana)decided today wherein it has been held that ‘Tull value of consideration’appearing in section 48 of the Act does not have any reference to the fairmarket value but to the consideration referred to 1n the sale deeds as the sale ITA No.230 of 2011 (O&M) A price of the assets which have been transferred. Further, it was concludedthat reference under Section 55A of the Act to the Valuation Officer forascertaining the fair market value of the capital asset was unjustified. Forthe detailed reasons recorded therein, the substantial questions of law areanswered against the revenue and in favour of the assessee. Consequently,the appeal is dismissed. (Ajay Kumar Mittal)Judge March 05, 2014;4$; (Anita Chaudhry)svudg